Highmark, UPMC waging Harrisburg regulatory battle

March 3, 2014

PITTSBURGH - Pittsburgh is the front line of the fight between Highmark and UPMC when it comes to customers and public relations, but Harrisburg is the epicenter of the regulatory universe for both organizations.

It's why both organizations have spent millions of dollars lobbying state lawmakers and regulators, and why rarely a week goes by when state Rep. Dan Frankel, D-Squirrel Hill, doesn't meet with or hear from at least one of them.

"This is perhaps the most complex system, the least easy to understand" system that lawmakers regularly deal with, Mr. Frankel said. And given all of the big health care issues facing the state and the nation, "The amount of money spent on government affairs [has] escalated dramatically."

The list of legislative, regulatory and constitutional issues affecting the two health organizations is a long one.

Highmark, for example, wants the Legislature to pass an "any willing insurer" law that would essentially require a health network to sign an access contract with a health insurer, as long as the insurer is willing to do so.

Such a law, in theory, would force UPMC to sign a deal giving full network access to Highmark customers, even though UPMC says it doesn't want to.

But last month, two lawmakers - Joseph Scarnati, Senate president pro tempore, R-Jefferson, and Sen. Don White, R-Indiana, who chairs the Senate's banking and insurance committee - sent a letter to Highmark CEO William Winkenwerder, asking the insurer to drop its "manufactured grass-roots campaign calling for unprecedented legislative action."

A companion version of the House legislation, co-sponsored by Mr. Frankel, could be introduced in the Senate this week.

Even if that issue dies - as it seems destined to, given the lack of support from Senate leaders - there are plenty of other health care issues to deal with. The top one might be the proposed overhaul of the state's Medicaid system, which would affect both organizations.

If and when Republican Gov. Tom Corbett agrees to accept billions in federal Medicaid assistance money - which could either expand the existing Medicaid program or, as Mr. Corbett wishes, provide "premium assistance" stipends that would allow those who qualify financially to buy their own policies on the private market - up to 600,000 Pennsylvanians might benefit.

For hospitals and insurers, that would mean creating 600,000 new policyholders and patients across the state. At a time when hospital inpatient stays are declining regionally, and when employer-sponsored health plans are also eroding, those are big numbers.

Further down the line, the Senate's insurance and banking committee is hearing from smaller provider groups and professional groups that wish to curtail health insurers' ability to conduct retroactive audits of providers to look for billing errors, a proposal found in SB 998. Another bill, SB 594, would "limit copayments and coinsurances for insured medical services," a law that would benefit physical therapists and chiropractors, who might see patients weekly.

"Insurers are playing defense" on some of these bills, said Joe Pittman, chief of staff to Mr. White. It's not just Highmark, and it's not just UPMC. "It's really not about that big dispute."

"Hospitals require a lot of people visiting a lot of different agencies to ensure they understand the issues at hand," said UPMC spokesman Paul Wood. "There are a multitude of the 'nonobvious' issues UPMC is working on at the state level."

Among them: nurse staffing issues, barriers to telemedicine, funding for cancer screenings and cancer research, shaping the state's rules on e-health records, and tort overhaul, including the recent passage of the so-called "apology rule," which gives doctors in Pennsylvania the ability to apologize or express sympathy to a patient without having that used as evidence in liability lawsuits.

Highmark, meanwhile, is keeping an eye on pharmaceutical issues - the regulation of generic biologic therapies known as "biosimilars," as well as a new pharmaceutical monitoring system - and bills that would require direct reimbursement to non-network ambulance providers, the reauthorization of the Pennsylvania Health Care Cost Containment Council, and a Senate resolution that calls for a study of "the feasibility and cost-effectiveness of merging public school district health care plans."

"Affordable access and health care choice in health care is a top priority. And, although the contract dispute with UPMC continues to be important to our customers, there are a range of issues that are significant to our business and the communities that we serve," said Highmark spokesman Aaron Billger.

As of last month, Highmark's proposed acquisition of Blue Cross of Northeastern Pennsylvania is pending before the state Insurance Department.

Meanwhile, state Reps. Jim Christiana, R-Beaver, and Mr. Frankel - who proposed the "any willing insurer" law - have asked state Attorney General Kathleen Kane to examine the tax exemptions claimed by UPMC to see if they run afoul of the state's "purely public charity" regulations.

On this issue, Highmark and UPMC are somewhat on the same page, Mr. Frankel said. Both organizations had a stake in Senate bill No. 4, which was approved by both chambers last year. That bill proposed an amendment to the state Constitution stipulating that it is the "exclusive right" of the Legislature - not the courts - to determine institutions of purely public charity.

Between the phone calls, the dinners, the face-to-face meetings to discuss the various topics, health care has become an issue that commands Mr. Frankel's attention more frequently.